WACO, Texas (KXXV) — There is 1.6 trillion dollars owed in federal student loan debt, which the federal government started collecting this week. Experts are already seeing impacts on credit scores.
“Until now, that being late or being behind or have not made payments, hasn’t impacted your credit report, but it will," said Dr. Billy Hensley, President and CEO of the National Endowment for Financial Education last week during an interview with 25 News Bobby Poitevint.
Now it’s happening.
“The data that I’ve seen within the last 24 hours is that credit scores are going down for this — that are delinquent and particularly for those that are defaulted," Jack Wallace with the educational consultant agency said.
He is the Director of Government and Lender Relations.
Wallace said he’s seeing anywhere from two to sixty-five point drops. This following Monday marks the official start by the Department of Education to resume collections on defaulted federal student loan borrowers.
The Department has previously said they have not collected on defaulted loans since March of 2020.
This pause was intended to allow borrowers a financial break in challenging times during the pandemic.
Wallace, along with other sources, said there are around four million Texans with student loans, with a combined student loan debt of almost 130 billion dollars.
25 News did a poll last week asking Central Texans if they had student loan debt.
Results:
37% of voters said yes
27% said no
34% said no they never had student loans
If you still haven’t been able to make a payment yet, experts recommend trying to re-consolidate your student loans into one.
Then see what income-driven repayment plans are best for you and your budget.
They recommend you start this process through studentaid.gov.
Experts said this not only could help put you back on track to making payments but helps get your credit score in a better place.
Also, don’t forget to check your emails.
The Department of Education said borrowers in default will receive emails on what steps they need to take next.
